The balance of risk erred to the side of caution overnight evident in broad based strength from the US dollar which has made considerable gains against major counterparts. Investors weighed less than convincing earnings from corporate America with rumours Egyptian President Hosni Mubarak may imminently step down after weeks of protests. We also saw some US dollar-positive news on the employment front with weekly jobless claims falling to 383,000 for the week ending Feb 5 in excess of 410,000 expected. The US dollar index which measures the value of the greenback against six major counterparts is currently trading 0.76 per cent higher at 78.224.
As anticipated the Bank of England kept benchmark interest rates at 50 bps with the value of stimulus remaining unchanged at GBP 200 billion. After suffering losses on the release of the rates decision, sterling was able to regain composure over the course of the US session current trading just shy of breakeven levels of US$1.61. Across the channel, Euro-zone debt fears are once again influencing price action which helped the Euro off its perch above US$1.36. This largely exacerbated an already weak Euro on the back of US dollar strength. At the time of writing the Euro is buying US$1.3590.
Meanwhile the Aussie dollar continued its downward trajectory after stumbling in the domestic session in response to the local employment data. The ensuing minutes of the jobs data saw a period of support for the Aussie as the headline figure surpassed market estimates - however the local unit began to retrace after investors digested the finer detail which showed the number of full time jobs fell by 8,000 which saw traders ease off the buying somewhat. Also important considerations need to be made for the quality of the data given the flood impact resulting in operational difficulties in conducting the survey - this may have also dampened market participant's conviction somewhat. One would expect as the state of Queensland embarks on a cleanup of epic proportion, the stimulus induced rebuilding process will no doubt provide a considerable boost to employment in the months to come.
In the absence of economic feedback, we expect local equity markets to be the key directive in today's trade with an appearance from RBA governor Stevens before the House of Representatives also a major theme. All eyes on the events of Egypt - the news President Mubarak will stay in office and hand over power to the vice president hasn't yet made a major dent across currencies, however with protesters reacting angrily to the news there's little doubt this will continue to be a major market moving theme in the days to come.